What Is the Service Recovery Paradox, and Is It Real?

January 10, 2019 | 3 minute read
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For nearly three decades, companies have held a common belief that “recovering” after delivering a poor customer service experience earns stronger customer loyalty than if a company delivered an excellent experience in the first place. This concept is called the service recovery paradox (SRP), relying on the assumption that customers appreciate our fallibility and that the act of “making things right” actually strengthens the company-customer bond. After all, who doesn’t like a story of redemption?

While this happy narrative provides comfort, particularly to companies that make a lot of mistakes already, is it indeed true? Do customers really give companies added loyalty when companies deliver poor service, or is SRP actually a myth?

Interestingly, some research shows that an element of truth exists in the claims. For example, according to a study by Mangini, the “service recovery paradox is most likely to occur when the failure is not considered by the customer to be severe, the customer has had no prior failure with the firm, the cause of the failure was viewed as unstable by the customer, and the customer perceived that the company had little control over the cause of the failure.”

Put more simply, if the customer doesn’t care that much about the issue (not severe) and they don’t think the problem is your fault anyway (little control), then your company may be forgiven for making the mistake. In these cases, the “good” result of recovery comes from a set of low expectations rather than from customers’ good will, loyalty, or confidence.

However, even in scenarios where SRPs are deemed “successful,” their efficacy as a loyalty lever is doubtful. Where customer benefits do accrue, Matos, Henrique, and Rossi suggest that service recovery does increase satisfaction, but does not:

  • impact repurchase intentions
  • increase word of mouth recommendations
  • improve corporate (brand) image

To paraphrase these findings, the only thing that improves after recovering from bad service is satisfaction, which is unfortunately a trailing measure of performance.

Still others, such as Kerry Bodine, suggest that the way to improve customer experiences (CX) and financial performance is to focus on creating experiences that are effective, easy for customers, and enjoyable. However, in a company with poor delivery mechanics, in which the experience stalls, almost crashes, and is finally resolved, it seems more likely that customers view the experience as ineffective, difficult or tedious, and frustrating. For instance, United Airlines’ failed attempt shows the limitations of customer goodwill no matter how well-intentioned the recovery efforts are.

In the face of failed delivery efforts, companies can’t afford to surrender and absolutely must try to recover–what other reasonable alternatives exist? But, companies hoping that such recovery activities will always increase the lifetime value of a customer or improve their propensity to transact additional business may be fooling themselves because SRP is more myth than reality.

In the end, or rather from the start, companies must strive to deliver consistent positive customer experiences to earn customer trust and loyalty. The margin for error is low since even “successful” recovery efforts erode trust and diminish customer loyalty. While investing in recovery efforts may ameliorate a poor experience, those efforts may not be enough to keep a customer and they certainly won’t be enough to earn a recommendationA better plan is to invest in delivering an exceptional experience each time.

To learn more about how Oracle Service offers powerful and intelligent B2B, B2C, and field solutions that allow customers to receive the service they want, when, and where they need it, visit our website.

Andrew McFarland

Andrew McFarland has over 25 years’ experience in executive leadership, including significant roles in global public and private companies with revenues between $10M and $14B. Known as an astute operations executive, he develops innovative business strategies and client-focused solutions to drive growth and improve margins. Andrew is known for rapidly transforming business practices to decrease costs and optimize performance.

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